Feature

New Life for the Old World

Europe's fortunes decoupled from America's soon after the financial crisis of 2008, as the ECB dithered. Now, the continent's stocks are set to climb nearly 10%. Best bets: Poland and European bank stocks.

Europe's failure to craft a swift response to the financial crisis delayed the rebound in the Continent's stocks, and although conditions for a sustained rally are improving, it will be years before markets scale new heights.

European and U.S. equities touched their post-2007 lows on the same date—March 9, 2009—but their fortunes decoupled shortly after. Decisive action by the Federal Reserve through quantitative easing paved the way for U.S. stocks to bounce back quickly, while the European Central Bank dithered. That...